In late 2012, the Rocky Mountain Institute’s cofounder, chairman, and chief scientist Amory Lovins spent seven weeks in Japan, China, India, Indonesia, and Singapore observing Asia’s emerging green energy revolution. In February 2013, he returned to Japan and China. Japan, China, and India—all vulnerable to climate change—turned out to be in different stages of a “shared and massive shift” to a green energy future, one with remarkable similarities to RMI’s Reinventing Fire vision for the United States.

Largely unnoticed in the West, Asia’s energy revolution is gathering speed. It’s driven by the same economic and strategic logic that Reinventing Fire showed could profitably shift the United States from fossil-fuel-based and nuclear energy to three-times-more-efficient use and three-fourths renewables by 2050.

Renewable energy now provides one-fifth of the world’s electricity and has added about half of the world’s new generating capacity each year since 2008. Excluding big hydro dams, renewables got $250 billion in private investment in 2011 alone, adding 84 GW, according to Bloomberg New Energy Finance and ren21.net. The results were similar in 2012.

Japan Awakens

After world-leading energy efficiency gains in the 1970s, Japan’s energy kaizen stagnated. Japanese industry remains among the most efficient of 11 major industrial nations, but Japan now ranks tenth among them in industrial cogeneration and commercial building efficiency, eighth in truck efficiency, and ties with the U.S. for next-to-last in car efficiency. With such low efficiencies and very high energy prices—far higher for electricity than in a more competitive market structure, while gas prices are historically linked to oil prices—fixing these inefficiencies can be stunningly profitable. For example, retrofitting semiconductor company Rohm’s Japan head office in front of the Kyoto railway station—even without using superwindows as RMI did in the Empire State Building retrofit—saved even more energy (44 percent) with a faster payback (two years). (See related: “Beyond ‘Green’: The Empire State Building Retrofit“)

As the debate triggered by the Fukushima disaster opens up a profound public energy conversation, Japan is starting to see those tremendous buildings efficiency opportunities—and to realize that it is the richest in renewable energy (wind, solar, and marine in particular) of any major industrial country. Japan has twice the per-hectare high-quality renewable potential of North America, three times that of Europe, and nine times that of Germany. Yet Japan’s renewable share of electricity generation is one-ninth that of Germany—so its renewable power exploitation is exactly the opposite of its relative endowment!

Why such poor renewable generation and modest ambition despite such rich local resources? Answer: because Japan is in a race with Chile to be the last OECD country to establish an independent grid operator bringing supply competition and transparent pricing to the old geographic utility monopolies.

But that is changing; Japan’s once-monolithic business support for utility monopolies-cum-monopsonies (one seller, one buyer) is eroding. Important impetus came in July 2012 from a bold initiative—feed-in tariffs that promote greater renewables integration into the grid—championed by Softbank founder and now solar entrepreneur Masayoshi Son. The tariffs were set at three to four times original European levels, because the government, apparently based on 2005 foreign prices, unaccountably believed renewables cost that much in Japan, where even commodities like PV racks, cables, and junction boxes sell for about twice the world price. Some 5.2 GW of feed-in-tariff applications were approved in 2012, including 3.9 GW of non-residential solar. As prices fall, the Industry Minister is expected to start phasing down the solar feed-in tariff with a 10 percent cut this spring.

Meanwhile, though, the government changed to one more aligned with incumbent monopolists, delaying reforms. And some utilities have been exploiting a loophole that lets them unilaterally reject renewable offerings, without explanation or appeal, as risky to grid stability—so the developer gets no payment and doesn’t build.

As these internal divisions play out, the Land of the Rising Sun is getting eclipsed—making early progress despite persistent obstacles, but falling far short of its potential and others’ progress. Japan added nearly 3 GW of photovoltaics in 2012—but even less-organized Italy installed 7 GW in 2011. Similarly, Japan’s windpower association projects the same market share in 2050 that Spain achieved back in 2010.

But there are hopeful signs too. Son-san’s initiative was supported by at least 34 provincial governors. Hiroshi Mikitani, billionaire founder of the e-commerce giant Rakuten, just left the powerful traditional business forum Keidanren to form a reformist rival group. Slowly, in the subtle and complex Japanese way, business leaders’ center of gravity is shifting toward better buys and more entrepreneurial models. Real projects demonstrating renewables’ competitive advantage will speed that shift.